CarelonRx Enters Agreement to Acquire Kroger’s Specialty Pharmacy

The Kroger Co. recently announced that it has entered into a definitive agreement for the sale of its specialty pharmacy business to CarelonRx, a subsidiary of Elevance Health.

Elevance Health’s CarelonRx segment markets and offers pharmacy services, including pharmacy benefit management services, to its affiliated health plan customers, as well as to external customers outside of the health plans the company owns.

CarelonRx offers a comprehensive pharmacy services portfolio, which includes all core pharmacy services, such as home delivery and specialty pharmacies, claims adjudication, formulary management, pharmacy networks, rebate administration, a prescription drug database and member services.

CarelonRx delegates certain core pharmacy services to CVS Caremark, pursuant to an agreement that is set to terminate on December 31, 2025.

CarelonRx recently conducted a specialty value of integration study, to better understand how the company’s integrated approach to specialty drug management can enhance existing medical and pharmacy benefits for better whole-health care, improved clinical outcomes, and controlled costs.

While just 3% of CarelonRx plan members take specialty medications, specialty drugs/medications account for over 60% of total drug spend (medical + pharmacy).

Elevance Health’s members with specialty conditions typically have high drug costs. In addition, approximately 83% of members who take specialty medications have other conditions they are managing. This may affect their whole health with the worsening of their other chronic and complex medical conditions.

Elevance Health continues to execute its strategy to accelerate capabilities and services, invest in high-growth opportunities, and optimize its health benefits business. This includes focusing on the long-term, whole-health needs of members who take specialty medications across medical and pharmacy benefits.

In implementing the company’s strategy, Elevance Health closed on the acquisition of BioPlus, a comprehensive specialty pharmacy subsidiary of CarepathRx, a portfolio company of Nautic Partners in 2023.

BioPlus provides a complete range of specialty pharmacy services for patients living with complex and chronic conditions, such as cancer, multiple sclerosis, hepatitis C, autoimmune diseases, and rheumatology. The company covers more than 100 limited distribution medications and has a footprint that touches all 50 states.

This acquisition was completed to help Elevance Health meet the specialty drug needs of its clients and customers with a whole-health approach, supported by programs across Elevance Health and Carelon. BioPlus operates as part of CarelonRx, Elevance Health’s pharmacy benefit manager within Carelon.

In December 2023, CarelonRx, Carelon’s pharmacy benefit manager, announced it will launch CarelonRx Pharmacy on Jan. 1, 2024. CarelonRx Pharmacy, a digital pharmacy, will allow members to engage with pharmacists via text, chat, or phone 24/7, compare costs of medications, and easily track the status of medications throughout the order process.

In addition, all CarelonRx members who utilize CarelonRx Pharmacy will be able to have their medications delivered to an address convenient to them (e.g. home address, vacation home, etc.).

Earlier this year, Elevance Health entered into an agreement to acquire Paragon Healthcare, a company specializing in infusible and injectable therapies. The acquisition expands the company’s capabilities catering to consumers with complex and chronic needs who can benefit the most from the company’s approach to whole-person health.

Most recently, The Kroger Co. announced the sale of its specialty pharmacy business to CarelonRx. Kroger’s specialty pharmacy serves patients with chronic illness that requires complex care. Skilled clinicians and superior therapy programs allow patients and prescribers to benefit from education and resources, counseling, side effect management, financial assistance, personalized care and administrative expertise. The specialty pharmacy business supports patients facing diseases including rheumatoid arthritis, growth hormone deficiencies, multiple sclerosis and bleeding disorders.

Kroger’s Specialty Pharmacy, located in Lake Mary, FL, operates six URAC-accredited pharmacies located in Orlando, FL; Harvey, LA; Lake Mary, FL; Irvine, CA; San Juan, PR; and Garden Grove, CA.

Kroger’s Specialty Pharmacy also operates three URAC accredited specialty infusion pharmacies in Richardson, TX; Dothan, AL; and Torrance, CA.